Ithaca Energy to acquire Chevron North Sea for $2bln

Ithaca Energy, a UK North Sea oil and gas operator, will acquire Chevron's North Sea field assets for for US$2 billion.

The transaction will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the company, resulting in an approximately 150 per cent increase in the proven and probable reserves of the company and a 300 per cent increase in forecast 2019 production, the company said.

Pro-forma the transaction, Ithaca’s asset base is estimated to consist of 2P reserves of approximately 225 million barrels of oil equivalent1 (MMboe) plus a further 45 MMboe2 of proven and probable contingent (2C) resources associated primarily with additional near-field development and infill drilling opportunities. The enlarged portfolio, encompassing 18 producing field interests in total, is forecast to deliver pro-forma 2019 production of approximately 80,000 barrels of oil equivalent per day (60 per cent liquids) at an operating cost of approximately $17 per barrel of oil equivalent.

As part of the transaction approximately 500 employees will transfer to the company, of which around 200 work offshore on the operated assets.

With the addition of the high quality, long life assets that characterise the Chevron North Sea CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of the Company and establishes Ithaca as the second largest independent oil and gas producer in the UK North Sea. The transaction provides a material step up in the scale and breadth of the Company’s producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cash-flows of the business and enables accelerated monetisation of Ithaca’s existing $2.2 billion of UK tax allowances.

The transaction has an effective date of 1 January 2019 and is expected to complete around the end of the third quarter of 2019 following approval of the acquisition by the UK Oil and Gas Authority. Taking into account the interim period cash-flows that are forecast to be generated by CNSL from the effective date, it is anticipated that the price payable at completion will be around $1.65 billion, subject to adjustments for the transfer of working capital.

“The acquisition of CNSL is a significant step forward in the long term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets,” Les Thomas, Ithaca Energy CEO. “We are very pleased to be acquiring a high quality portfolio of assets and experienced operational organisation that fits well with our existing business. Like our current portfolio, the production and reserves base is heavily weighted towards operated asset positions, which provides us with the ability to actively prioritise and unlock the full potential of the business.”

“The acquisition is a key part of the Delek Group’s strategic focus on building a world class E&P business,” Asi Bartfeld, Delek Group CEO. “Acquiring CNSL accelerates implementation of that strategy and further strengthens the group’s oil and gas business. We see exciting growth opportunities in the North Sea and are looking forward to working with Ithaca to deliver upon our value and growth targets.”